The government of Pakistan has ended the monopoly of Sui gas companies on gas sales. The Petroleum Division has introduced a new framework that allows private sector companies to purchase gas from Exploration and Production (E&P) companies. This policy is expected to bring significant changes to the country’s gas sector.
Key Features of the New Framework
The framework outlines the conditions under which private companies can buy gas from E&P firms. A major change is that E&P companies can now sell up to 35% of their gas share to third parties. This marks a significant liberalization of the gas sector.
Key Features of the Gas Sale Framework
| Feature | Details |
|---|---|
| Gas Sale to Private Sector | E&P companies can sell up to 35% of their gas to private companies. |
| Annual Gas Sale Cap | A cap of 100 mmcfd will be set annually for third-party sales. |
| Agreement Requirements | A Gas Sale and Purchase Agreement (GSPA) will be required between E&P companies and private buyers. |
Benefits for E&P Companies
With this new framework, E&P companies are expected to see improved liquidity. Private buyers will pay auctioned prices promptly, which will help solve the ongoing cash flow problems in the sector.
Benefits for E&P Companies
| Benefit | Explanation |
|---|---|
| Timely Payments | Private sector buyers will ensure prompt payments. |
| Increased Cash Flow | Improved liquidity will support growth and expansion of E&P companies. |
| Revenue Generation | The policy will increase government revenue through taxes and royalties. |
Provincial Interests and Gas Sale Terms
The new policy respects the rights of provinces. Gas will be allocated based on the location of the wellhead, as outlined in the Constitution.
Provincial and Government Interests
| Interest Area | Details |
|---|---|
| Provincial Priority | Provinces will receive gas based on their wellheads. |
| Revenue for Government | Increased revenues through royalties and taxes. |
Transparent Bidding Process
To maintain fairness, the sale of gas to private buyers will follow a competitive bidding process. This ensures transparency in the allocation of gas.
Bidding Process Details
| Aspect | Details |
|---|---|
| Open Bidding | Gas sales will follow an international competitive bidding process. |
| Regulatory Oversight | The Oil and Gas Regulatory Authority (OGRA) will oversee the process. |
Summary
The new framework ending the Sui companies’ monopoly is a significant reform. It allows private sector involvement, resolves liquidity issues, and promises better revenue for the government. This move is expected to modernize the country’s gas sector and attract much-needed investment.
